When I was laid off in November, I was more than halfway vested in my company’s ESOP plan. I had convinced myself that if I could hang on for two more years, I could step away from the traditional work world and pursue my passion projects full time.
I had it in my head that I needed to hit a magic number to retire comfortably — one that Fidelity defines as 10 times your salary by age 67.
Getting laid off for the first time at 58 forced me to take a hard look at what retiring comfortably actually looked like for me. More is not a number, and the “10x my salary” rule had kept me from advancing for too long. I was operating on a faulty premise.
I like to be safe
By nature, I am hardwired to take the safe route. That instinct kept me in a full-time job that, over time, became a poor fit for me.
I told myself I was being responsible by not taking a full leap into creative work until I established a financial foundation that was comfortable. But when the job disappeared, so did the excuse that I was waiting for the perfect moment for my life to begin.
I began by grounding my thinking in current reality. I reminded myself that I’m an entrepreneur at the core with a fully functioning LLC and several side hustles already in progress.
I never truly planned to retire in the traditional sense. Writing for a living has always been part of my long-term plan, and over the last few years, building a space where rescued Quarter Horses, burned-out healthcare professionals, and first responders might heal together through community and writing has become a priority.
Losing my job also accelerated a truth I could no longer ignore: You cannot negotiate with time.
It’s all about handling the cash flow
What I have learned since being laid off is that retiring comfortably has far less to do with hitting a magic number than it does with getting a handle on your cash flow.
It seems that a universal retirement number is somewhat of an urban myth. Certified financial planners, such as Joe Schmitz Jr. in Kiplinger, point out that needs vary widely based on lifestyle, where you live, your housing needs, and health status. A homeowner with decades of equity faces different expenses than someone who has rented her entire life. Defining what your life will actually cost and getting a handle on your personal finances will tell you what number is right for you.
By gaining this knowledge, I was able to shift my focus. Instead of worrying about a future savings goal, I began to examine what I need each month to live well. While traditional income matters, understanding what other sources of income, such as Social Security, existing IRAs or 401(k)s, rental income, and side hustles, might contribute is also important.
I also had to get real about my spending habits and develop a plan to address my short-term need of replacing a regular paycheck.
In addition to savings accounts, I found options for those who want to draw on retirement funds prior to 59 ½. A regular SoSEPP withdrawal from an existing retirement fund offers one solution. This approach allows you to pull an early, regular withdrawal monthly with some restrictions. If you are over 55, you might also be eligible to withdraw 401(k) funds from the company that laid you off, that you left for a new position, or retired from, without penalty. Be sure to consult a tax accountant or financial advisor to determine what’s best for you.
In the end, the message that saving early and contributing to retirement regularly was all I needed to do to retire comfortably was only part of the story. Fidelity’s guidelines assume that someone starts saving at 25 years old and consistently contributes 15% of their income. Those rules can be intimidating for those who were not able to start saving early in their careers. Because compounding is queen and time is your multiplier, every amount saved today — no matter how small — is worth sacrificing a Starbucks or a night out.
It’s never too early — or too late — to build a business plan for retirement.
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